At present, the State of Alaska does not levy a sales tax. There are, however, several municipal governments that do. The state constitution and other state law give very broad authority to cities and boroughs regarding sales tax; however, a sales tax is not authorized unless an election is held on the question and it is approved by a majority of the voters.
There are very few non-taxable items (exemptions) required by state law. This allows a municipality a lot of power to decide what is and is not taxable. State law also allows municipalities that levy a sales tax to levy a use tax, which is a tax levied on the storage, use, or consumption of goods in a municipality.
There is currently little state regulation of sales and use tax. State law gives local government’s broad authority in enacting a sales tax ordinance and determining what is and is not taxable. At one time there was a limit on the maximum amount a municipality could charge for a sales tax, but that limit has been removed. For information on what is not taxable, contact the municipality directly. There are some exemptions spelled out in state law; however, other than these few required exemptions, exemptions are a local issue. Out of 162 municipal governments on the state approximately 110 levy some form of a sales tax which range from a low of 1% to a high of 7%. If both a borough and a city located within that borough levy sales taxes, the sales tax due from the consumer is the sum of the two taxes.
Can I get the proper form from the state to file my sales tax with the local municipality?
No. In order to file your return, you must get the form from the municipality in which you conducted your business and owe the tax.
Do I have to pay a use tax on goods that I have already paid a sales tax on?
Not necessarily. State law requires that if you furnish proof to the municipality that you have paid a sales tax on the item, you will only have to pay for the difference in the amount of the sales tax paid and the use tax, if there is a difference.
Where can I get a listing of all municipalities that levy a sales tax?
There are two places to find that information. The department’s publication, Alaska Taxable is a annual publication that lists all municipalities and the types of tax each levies. Alaska Taxable also lists the amount of taxes collected by each of these municipalities. The information in Alaska Taxable is "dated," meaning that it reflects the information up to a given date, usually July 1 of the prior year. You can get more current information from the Division of Community and Regional Affairs's website: "Alaska Community Database Online"
Can I be charged a sales tax by both the city and the borough?
It is possible. State law allows both cities and boroughs to levy a sales tax. In many boroughs that levy a sales tax, it is not unusual for a city within that borough to also levy a tax. (AS 29.45.650 and AS 29.45.700).
What is a use tax and how does it work?
A use tax is a tax that is levied on goods that are bought outside the taxing authority's jurisdiction and then brought into the jurisdiction. This tax is designed to discourage the purchase of products that are not subject to a sales tax. By state law, this tax may be levied on the storage, use, or consumption of goods in the borough/city. The use tax must equal the sales tax rate and is levied only on buyers (AS 29.45.650(b)).